How is economic value created during transactions between buyers and sellers?
Buyer and seller both benefit from exchanging some good if the seller gets more than his opportunity cost (i.e., the value of the best forgone alternative), and the buyer pays less than her valuation (maximum willingness to pay for it before going elsewhere). Sellers can improve economic value by lowering the cost of production, improving the quality of the product, and reducing the transaction costs.
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Refer to the table above. If the six highest-value buyers and the six least-cost sellers engage in trade, what is the social surplus?
A) $6 B) $8 C) $10 D) $12
Refer to above Table 2-1. What is the level of Personal Saving?
A) 100 B) 90 C) 80 D) 130
The velocity of money is the:
a. number of times per year each dollar is used to transact an exchange. b. rapidity of price increases during inflation. c. number of times the price level increases during a year. d. time it takes for checks to clear banks. e. number of times per year each product is purchased during the year.
Mutually beneficial trade is impossible when different persons have different preferences about goods and services
a. True b. False Indicate whether the statement is true or false